MON. NOV. 3- So, Who Is In Charge Here?

On Friday afternoon, in a 2PM speech, Fed Chair Bernanke sought a ‘government backstop’ for the mortgage bond market. Keeping all political speak out of this, how much more bullish can this be for the stock market? Yes, it absolutely indicates that clearly Bernanke and other Fed officials are scared. Yes, the moves does smack of some degree of desperation. It also is the final straw in a hypothesis many have been trying to propose: the government is going to do anything it takes to halt this financial crisis in its tracks. Nobody id discussing the long-terms ramifications of all of this and we will not either; however, in the short run, well, last week was the best week for the stock market in a generation. The old parable ‘don’t fight the Fed’ has been taken to a whole new level. Will it work in the long-run? Nobody knows with any certainty. But for day traders, the entire game has been changed. Rather than guessing which company will next fail, we now ponder things like how high Las Vegas Sands (LVS) can soar on nay given day. As holiday season approaches and volumes fall a bit, realize the environment/parameters at work here and trade accordingly.

The markets are amazingly quiet in the early going, but the upward bias continues ahead of the election. Prices throughout Asia were up 1% to 2% with Europe mildly higher as well. Wall Street will likely be relatively calm today as most big institutions are positioned already for the election and the mutual fund fiscal year has come and gone. So, look for relatively choppy trade all day with less volatility than in recent days…an old-fashioned Monday in November just before an election.


Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

LNG- very strong Friday; looking to buy at 3.75 if it opens down

JPM, BAC- rallied sharply on close; should open down. If they do, looking to buy both at unch or a touch higher

STP- closed at high of day on imbalance; if it got there, would buy thru 17.50 ala ICE on Friday (look at the ICE thru 87 as a comparison for educational purposes)

LCAV-up on major short covering on Friday

MERC- strong all day Friday; closed near a high

AXL, MTG- rallied on short covering; rally may well continue today. If it opens near unch, looking for A-B-A2 to upside

FIG, TTM, AGM- all upticked dramatically on close; looking for these to be similar to the STP plays above. Set-ups likely won’t materialize, but if they do, they will all be good

CVI – among the small-cap energies catching a bid; looking for more strength today if oil strong

PLA- almost doubled on Friday; may be short squeeze here

MRO, BWP- on “Mad Money” Friday night

OSK- beat for quarter, warned for year, but has adequate capital

HIG- claims they should have around $2 billion in net capital by year’s end

BIDU- announced buyback

SOL – secured additional credit

GT- good earnings


Bad-

CTV- closed very weak; looking to short thru 14.55

XTXI- in some degree of trouble as they are raising money; looking to short thru 9.75 and/or some type of A-B-A2 pattern

VISN- posted bad earnings Thurs night; stock closed near a low in falling significantly Friday

TE- oddly weak on Friday; looking to short thru Friday’s low of 11.45 should it open higher

EK- this too bizarrely weak amid the rally last week. Wonder if it really cascades down; will short below Friday’s low around 8.95

DRYS- missed its earnings slightly however will likely be up as it appears they will weather the financial crisis




Earnings:

MON NOV 3 BEF

AMT ASF AYE

COL DRYS DVA

GAS GT MFA

OSK PEI SPG

SRP SYY


MON NOV 3 AFT

ADP APC CRK

EOG FST GHM

HCN HLF JCOM

MA MHK OTEX

PBI PFG PL

PLLL PPS SM

UDR


Good luck today.